Karl Herchenroeder

Big-tech acquisitions of startup competitors are harmful because startups usually deliver the “paradigm shifting innovations,” FTC staffer Lina Khan said at Wednesday’s competition policy hearing (see 1810160062). Antitrust enforcers should be wary of seemingly harmless acquisitions like Facebook’s 2013 buy of VPN provider Onavo, argued Khan, a staffer for Commissioner Rohit Chopra and fellow at Columbia University Law School. Onavo grants users heightened security, but it allows the social network to track in “extremely close detail” which rival apps are diverting attention from Facebook, she said. This allows the platform to detect which startups are the biggest competitive threat, shaping acquisition strategy and leading to purchases of apps like tbh and Moves, Khan said. These types of acquisition might not directly affect competition in the digital market, but they improve Facebook’s position and strengthen its leverage as incumbent, she said. It’s unclear how much competition is the right amount to produce a healthy amount of innovation, argued University of California-Berkeley economist Steven Tadelis. Companies need market power to reap the benefits of innovation, he said. Tadelis is convinced current antitrust tools guided by solid economic thinking are adequate, and each case should be evaluated on its own merits. Former FTC General Counsel Willard Tom, now at Morgan Lewis, agreed existing antitrust tools are adequate. Early stage entry is now extremely cheap and easy, given cost reductions with cloud computing, Tadelis said.

Antitrust action against Microsoft in the late 1990s enabled an explosion of innovation, allowing platforms like Google, Facebook and Amazon to solidify dominant positions, academics said Tuesday at FTC hearings (see 1810150052). Microsoft let companies use the internet as a development platform and expand using HTML protocol, said Columbia University Law School professor Tim Wu.

The FTC needs a better understanding of “mass data surveillance” to decide whether current rules distort the competitive process, Commissioner Rohit Chopra said Monday during the agency’s third policy hearing (see 1810020061). Differing views were heard on the state of competitive tech markets.

Administrator David Redl said Friday he's hopeful comments on NTIA’s privacy principles (see 1810100057) will show privacy and innovation can be maximized under a new federal privacy framework. NTIA met with more than 60 companies, groups and individuals before the comment solicitation, he said. One message the agency heard from the tech industry is that privacy and innovation are “not mutually exclusive goals,” Redl told the Brookings Institution.

The thrust of a forthcoming privacy bill from Sen. Ron Wyden will be a “different brand” of tech sector transparency with “consequences” for transgressing companies, the Oregon Democrat told us. Also Thursday, Senate Commerce Committee leadership hammered Google for not disclosing sooner its recent Google+ vulnerability (see 1810100066), given the company’s chief privacy officer testified months after the issue reportedly was discovered (see 1809260050).

Sen. Richard Blumenthal, D-Conn., told us Tuesday he would call for a full FTC investigation of Google’s recently disclosed Google+ privacy vulnerability (see 1810090056). He repeated that demand Wednesday during a Senate Commerce Committee hearing in which lawmakers discussed policy and FTC authority with privacy experts.

A point of contention between industry and consumer groups will be how lawmakers define FTC rulemaking authority when crafting privacy legislation, experts and witnesses told us. The Senate Commerce Committee holds a hearing Wednesday (see 1810040040) on legislation (see 1809260050), this time with privacy witnesses, after questioning an all-industry panel in the first round.

The Senate Commerce Committee has a staff briefing scheduled this week with Facebook to discuss the recent hack (see 1810020046), a committee aide said Friday. A House Commerce Committee aide said leadership will pursue follow-up briefings with Facebook after a preliminary phone conversation with staff Thursday. Questions remain about the impact on third-party apps from the breach, the House Commerce aide said. The House Judiciary Committee, which didn’t comment, also requested a briefing from the platform. Facebook didn’t comment.

ThePirateBay.org, an illicit torrent indexing service, remains a prominent target for the music, film and video game industries, show comments to the Office of the U.S. Trade Representative posted this week. USTR collected comments through Monday for its Special 301 report on countries and groups that infringe U.S. intellectual property.

The Department of Homeland Security reduced the time it takes to patch a cyber vulnerability to within 30 days, Assistant Homeland Security Secretary for Cybersecurity and Communications Jeanette Manfra said in an interview for C-SPAN's The Communicators series, set to be televised later She conceded the agency struggled with patching vulnerabilities in an acceptable amount of time in the past. Shrinking the response had a ripple effect throughout the federal government, she said. The digital economy is so interconnected that cyber infections can spread quickly across the world, she said, calling cyberthreats a “constant, ever-present activity that everyone has to face.” She said the department had “limited visibility” of foreign influence campaigns in the 2016 election. DHS has worked hard in the past two years to deploy more “sensing capabilities,” particularly with state and local authorities, she said, and more than 1,500 jurisdictions participate in information sharing.